North Korea unilaterally raises wages at Kaesong

Pyongyang has unilaterally notified Seoul of its decision to hike minimum wages of workers at the inter-Korean Kaesong Industrial Complex by 5.18 percent starting from next week, the Ministry of Unification announced on Thursday.

North Korea abruptly alerted Seoul on Tuesday that it plans to raise the monthly minimum wage of Kaesong workers nearly $4, from $70.35 to $74, starting from March 1, a South Korean Unification Ministry official said.

In response, the South Korean government on Thursday attempted to convey a letter to Pyongyang to protest the notification and requested to meeting of the Inter-Korean Joint Committee on March 13 to discuss the matter.

However, the official said that the North Korean side refused to accept the notice. “Our government’s position is that workers’ wages cannot be decided unilaterally without consultation between the North and the South,” the official added.

Pyongyang also said that Kaesong companies should pay their workers 15 percent of their base salary, plus any overtime wages and other living expenses, as a part of social insurance fees. South Korean companies currently only pay 15 percent of base salary.

This would increase the average monthly wage for North Korean workers in the Kaesong zone, raising it from $155 to $164.10, the official added.

At the end of last year, North Korea’s Standing Committee of the Supreme People’s Assembly changed 10 clauses governing the Kaesong wage system.

The North said in a new clause that it will determine the minimum wage and its increases by evaluating labor productivity, the economic development of the industrial complex and the employment situation.

Until now, the minimum wage for workers in Kaesong was defined in an agreement by South Korea’s Kaesong Industrial Complex Management Committee and the North Korean Bureau.

Since 2007, the amount has been increased by 5 percent each year. Including overtime pay and incentives, a worker can receive monthly pay as high as $150. The North Korean government takes about 40 percent.

Last June, the two Koreas agreed to increase the minimum wage by 5 percent starting from May, adding an additional $4 million in costs to South Korean companies.

BY SARAH KIM [sarahkim@joongang.co.kr]